On Thursday, correction in the pair USD/CAD continued. The quotes had tested the upper line of Bollinger bands indicator, but after failing to break it down, the pair fell to the level of 1.1293. Pressure on the USD was caused by the weekly report on initial applications for unemployment benefits, the number of applications amounted to 291 thousand, which was above the forecast. The data on preliminary index of business activity in the manufacturing sector was also negative, as per Markit. The index fell to the level of 54.7 points, which is the worst performance since this January. On the other hand, the Canadian dollar was supported by Canadian retail sales statistics, which increased by 1.8% in September.
Today, market participants are waiting for the release of consumer price index in Canada for October. It is expected that this index will increase and reach the level of 2.1%, which can provide support to the Canadian currency.
Support and resistance
Currently, the pair is rising to the level of 1.1315 (middle line of Bollinger bands); however the trading is carried out in the downward channel. The level of 1.1315 seems the key one and in case of breakdown of this level the price can continue upward movement up to the upper limit of the channel at the level of 1.1345. Otherwise, the price can fall to 1.1270. Technical indicators give mixed signals. Bollinger bands are in the sideways channel. MACD histogram is in the negative zone; its volumes are stable. Stochastic lines are leaving oversold zone, forming a buy signal.
Support levels: 1.1270 and 1.1250.
Resistance levels: 1.1315 and 1.1345.
In the current situation long positions with the target of 1.1345 can be opened if the price consolidates above the level of 1.1315. Short positions can be opened if the price pushes off from the level of 1.1315 and reaches the level of 1.1300. In this case take profit is advisable at the level of 1.1270.
Analyst of LiteForex Investments LimitedPublication source